In the first quarter of 2014, Estonia’s unemployment rate decreased to 8.5%, while employment declined by 0.7%. As GDP decreased more than employment, one of the simplest productivity indicators, GDP per employed declined. As wage growth remained fast, the gap between the growth rates of wages and productivity probably widened.

Employment decreased in the first three months of 2014 because of negative net migration and increased number of economically inactive. Almost 7000 persons emigrated last year. In the first quarter of this year, employment declined mostly among the elderly, aged 50–74. The number of employed shrank the most in agriculture and manufacturing and increased in several services’ sectors that enjoy still strong domestic consumption.

The unemployment rate decreased as the number of unemployed declined but also because the number of economically inactive rose. The number of economically inactive persons (students, retired and discouraged persons) grew due to health issues and the need to take care of family members. The number of people who have given up looking for a job, the discouraged, also increased.

The unemployment rate is expected to decrease further this year. Emigration and employment abroad will continue at recent levels despite difficult economic situation in Finland. That will add pressure to the already tight labour market, increasing the imbalances in the economy.